After a brief holiday hiatus, Congress is heading back to Capitol Hill this week to try to eke out a deal to avoid higher tax rates and spending cuts that will kick in on Jan. 1.
In a recent interview on ABC's This Week, Sen. Amy Klobuchar, D-MN, talked about the so-called fiscal cliff. She pointed out that the Senate had already passed a plan that would extend the Bush-era tax cuts for those making less than $250,000 and eliminate them for those making more than that.
The proposal would take a big chunk out of the nation's deficit, she said.
"As you know, if we go back to the Clinton levels for people making over $250,000 we literally save $1 trillion in 10 years," she said.
One trillion is in the ballpark.
Klobuchar is talking about a plan that would let tax cuts implemented under former President George W. Bush's tenure to expire for higher earners. If Congress agrees to the plan, the two top tax rates of 33 and 35 percent would revert to 36 and 39.6 percent, respectively - the top rates during former President Bill Clinton's tenure.
The idea hasn't been popular among Republicans, who would like to see the income bar set higher, or to keep the current rates in place for everyone.
Still, the plan stands to lower the nation's deficit, according to a recent report by the Congressional Budget Office, the non-partisan number-crunching arm of Congress.
If tax cuts are extended for everyone, it would cost about $4.5 trillion. But if they are extended for those falling in lower tax brackets, it would cost the government $3.7 trillion.
That's an $824 billion bite out of the nation's deficit over 10 years. The White House Office of Management and Budget has a similar estimate in its latest budget proposal.
But the potential savings doesn't includes the roughly $127 billion the nation would save on interest on its debt, pointed out economist Chuck Marr, who works for the left-leaning Center for Budget and Policy Priorities. Factoring in interest savings brings total savings to about $950 billion, he wrote on the group's "Off the Charts" blog.
Klobuchar could have been more precise by saying "nearly" $1 trillion, or by pointing out that her estimate includes interest savings as well.
Still, according to the Congressional Budget Office, her numbers are in the ballpark. Her claim leans toward accurate.
This Week, video, interview with Sens. Amy Klobuchar and Johnny Isakson, Dec. 23, 2012
Bloomberg News, Breaking down the cliff: The Bush tax cuts, by Evan Soltas, Nov. 28, 2012
The Congressional Budget Office, An Update to the Budget and Economic Outlook:
Fiscal Years 2012 to 2022, Aug. 2012
Office of Management and Budget, Summary Tables: Budget Fiscal Year 2013, accessed Dec. 24, 2012
Center for Budget and Policy Priorities, CBO: Ending High-Income Tax Cuts Would Save Almost $1 Trillion, by Chuck Marr, Aug. 24, 20123 Comments)
At least one candidate says she's interested in representing the St. Peter area once DFL Rep. Terry Morrow vacates his seat.
Robin Courrier will seek the DFL endorsement for House District 19A, which includes Courrier's town of North Mankato and St. Peter, according to a press release from her campaign.
Courrier is an elementary school teacher. She serves as President for the Mankato Teachers' Association and is on Education Minnesota's Governing Board, according to the press release. If elected, Courrier says she will focus on education, health care and job creation.
Meanwhile, the New Ulm Journal reported last week that former Republican state Rep. Allen Quist is also interested in the seat.
Morrow announced last week that he is taking a job in Chicago. He'll resign before the start of the 2013 legislative session.
Gov. Mark Dayton has yet to call a special election for the seat.
Minnesota 7th Congressional District Rep. Collin Peterson is among the fiscal cliff skeptics.
In an interview with Minnesota Public Radio News, he said it won't be catastrophic if Congress fails to meet the January 1, 2013 deadline to pass a deal to avoid the fiscal cliff, a combination of tax increases and spending cuts that some fiscal experts say could throw the nation back into a recession.
"All that's happening is that the laws that we passed are going to go into effect and they're actually going to reduce the deficit," he said. "So I don't see this as the end of the world, but people have made it out like something catastrophic is going to happen. I don't believe it."
Peterson said he's hearing it's unlikely Congress will scrape together a deal before the end of the year.
"I just can't see how, given what happened before we left, how something that's acceptable to the president and the Senate can get through the House," he said.
If Congress fails to act, it would mean higher taxes for everyone because tax rates would return to levels last seen during Bill Clinton's administration.
But Peterson said the effect won't be too burdensome for most people. Rather, it's the elimination of a payroll tax cut that could hurt people's wallets immediately, he said.
"That's going to be the biggest effect on people when they start that 2 percent of the payroll tax they haven't had to pay," Peterson said. "When that goes back on, that's going to have a bigger affect than probably the income tax on normal people."
Peterson also said its unlikely Congress will pass a new farm bill by the end of the year. Peterson said he remains opposed to extending the current measure because he fears it would stall negotiations for another year or so.
At this point, Peterson said a more likely scenario would involve reverting to "permanent law," a set of provisions written in the 1930s and 1940s that would effectively make it more expensive for the government to pay for crop supports.
Peterson said going back to the old law could jump-start passage of a new farm bill.(0 Comments)